72. Asian International vs.

Parayno They were issued pursuant to the power of the CIR under
Section 4 of the National Internal Revenue Code,34 viz:
G.R. No. 163445 December 18, 2007
Section 4. Power of the Commissioner to Interpret Tax
FACTS: Laws and to Decide Tax Cases

 Petitioners Aisia International Auctioneers, Inc (AIAI) Petitioners point out that the CA based its decision on
and Subic Bay Motors Corporation are Philippine Section 7 of R.A. No. 1125 that the CTA "shall exercise
corporations with place of business within the Subic exclusive appellate jurisdiction to review by appeal…"
Special Economic Zone (SSEZ) decisions of the CIR.

 They are engaged in the importation of mainly They argue that in the instant case, there is no decision of
2ndhand or used motor vehicles and heavy the respondent CIR on any disputed assessment to speak
transportation or construction equipment which they of as what is being questioned is purely the authority of
sell to the public thru auction the CIR to impose and collect value-added and excise taxes.

 Petitioners filed a complaint before the RTC praying
for the nullification of RMC No. 31-2003 which was
later amended by RMC 32-2003, for being
unconstitutional and an ultra vires act,
 which was issue by then CIR Gillermo
Parayno, setting the “ "Uniform Guidelines on
the Taxation of Imported Motor Vehicles
through the Subic Free Port Zone and Other
Freeport Zones that are Sold at Public
Auction."
 Respondents CIR, BIR Regional Director and BIR
Revenue District Officer also filed their joint Motion to
Dismiss on the grounds that "[t]he trial court has no
jurisdiction over the subject matter of the complaint"
and "[a] condition precedent, that is, exhaustion of
administrative remedies, has not been complied
with."11
ISSUE: Does the TC have jurisdiction to hear a case to
declare the RMCs as unconstitutional and against existing
laws?
Petitioners’ failure to ask the CIR for a reconsideration of
the assailed revenue regulations and RMCs is another
reason why the instant case should be dismissed.
It is settled that the premature invocation of the court's
intervention is fatal to one's cause of action.
If a remedy within the administrative machinery can still
be resorted to by giving the administrative officer every
opportunity to decide on a matter that comes within his
jurisdiction, then such remedy must first be exhausted
before the court’s power of judicial review can be
sought.35
The party with an administrative remedy must not only
initiate the prescribed administrative procedure to obtain
relief but also pursue it to its appropriate conclusion
before seeking judicial intervention in order to give the
administrative agency an opportunity to decide the matter
itself correctly and prevent unnecessary and premature
resort to the court. 36

RULING: NO

CTA is the proper court to decide the case.

R.A. No. 1125, as amended, states:

Sec. 7. Jurisdiction.—The Court of Tax Appeals

shall exercise exclusive appellate jurisdiction to
review by appeal, as herein provided—

(1) Decisions of the Commissioner of Internal

Revenue in cases involving disputed
assessments, refunds of internal revenue taxes,
fees or other charges, penalties imposed in
relation thereto, or other matters arising under
the National Internal Revenue Code or other
laws or part of law administered by the Bureau
of Internal Revenue; x x x (emphases supplied)

We have held that RMCs are considered

administrative rulings which are issued from time to time
by the CIR.30

In the case at bar, the assailed revenue regulations and

revenue memorandum circulars are actually rulings or
opinions of the CIR on the tax treatment of motor vehicles
sold at public auction within the SSEZ to implement
Section 12 of R.A. No. 7227 which provides that
"exportation or removal of goods from the territory of the
[SSEZ] to the other parts of the Philippine territory shall be
subject to customs duties and taxes under the Customs and
Tariff Code and other relevant tax laws of the Philippines."